Tencent Acquires Sumo Digital for Approximately 1.3 Billion

Written by Brandon Hofer on July 20, 2021

News: Tencent adds another company to their ranks as their aggressive growth continues in the industry.

Another game development studio is off the market as it has been revealed that Sumo Digital has been acquired by Tencent. Sumo Digital is a British game developer that has worked with a number of different companies to develop games. They worked with Microsoft in the past to help develop and release Crackdown 3 for the Xbox One as well as Sony for Sackboy: A Big Adventure which is available on PlayStation 5 and PlayStation 4. Of course they have other games as well but those are two of the bigger titles that people know about.

Sumo Digital started in 2003 and started with just 13 people. They eventually grew to 10 international studios. They started in Sheffield but now have studios in locations such as Pune, India, Nottingham, Newcastle, The Chinese Room in Brighton, Red Kite Games in Leeds, PixelAnt in Wroclaw, Poland, and more.

Tencent has been in the news a lot recently as it relates to the gaming industry. There are people voicing concerns about this company that has ties to the Chinese government gaining more influence in the gaming industry. This purchase of Sumo Digital for 1.27 billion will expand their reach globally like their prior acquisitions have done. Interestingly enough, this purchase comes after China’s market regulators prevented Tencent from merging a couple of streaming sites due to potential antitrust violations it would cause.

The shareholders at Sumo Digital will definitely be cashing in though receiving 513 pence in cash per share which is a 43% premium. This values the company at 919 million pounds and also sent Sumo Digital’s shares up 42% to a record high.

Tencent also has stakes in Epic (Fortnite) and Riot (League of Legends) and has now become the second largest video game group by revenue after Sony.

"The Board of Sumo firmly believes the business will benefit from Tencent's broad video gaming eco-system, proven industry expertise and its strategic resources," non-executive chairman Ian Livingstone said.

"The opportunity to work with Tencent is one we just couldn't miss," said Carl Cavers, who founded the company 18 years ago.

What do you think about this acquisition? Tell us in the comment section below.

source: Reuters